Herrmann v. Rogers
| Decision Date | 17 July 1958 |
| Docket Number | No. 15233.,15233. |
| Citation | 256 F.2d 871 |
| Parties | Frieda HERRMANN, as sole remaining trustee under Trust Agreement dated March 30, 1946, by and between Fred Nagel, donor, and Frieda Herrmann and Hazel Ouse, trustees, Appellant, v. William P. ROGERS, Attorney General of the United States, Appellee. William P. ROGERS, Attorney General of the United States, Appellant, v. Frieda HERRMANN, as sole remaining trustee under Trust Agreement dated March 30, 1946, by and between Fred Nagel, donor, and Frieda Herrmann and Hazel Ouse, trustees, Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Felton & Bielenberg, Moscow, Idaho, Gee & Hargraves, Pocatello, Idaho, Philip E. Petersen, Moscow, Idaho, for appellant.
Sherman F. Furey, Jr., U. S. Atty., Marion J. Callister, Asst. U. S. Atty., Boise, Idaho, Dallas S. Townsend, Asst. Atty. Gen., James D. Hill, Irwin A. Seibel, George Searls, Attys., Dept. of Justice, Washington, D. C., for appellee.
Before FEE and HAMLEY, Circuit Judges, and ROSS, District Judge.
These are cross appeals from the judgment entered in action number 1946, in the United States District Court for the District of Idaho, Central Division, entitled "Herbert Brownell, Jr., Attorney General of the United States, plaintiff, vs. Frieda Herrmann, as trustee under Trust Agreement dated March 30, 1946, by and between Fred Nagel, donor, and Frieda Herrmann and Hazel Ouse, trustees, defendants."
This action was commenced by the Attorney General of the United States under Section 17 of the Trading with the Enemy Act (40 Stat. 425, 50 U.S.C.A. Appendix, § 17) against the trustee of an inter vivos trust created in favor of persons, all of whom were residents and nationals of Germany. As successor to the Alien Property Custodian, the Attorney General had vested all the outstanding beneficial interests in the trust as enemy property. The complaint asked that the trustee be directed to pay over to the Attorney General all of the trust property in her hands; that the trustee be surcharged for having wrongfully distributed trust funds for the benefit of the enemy nationals; and that the trustee render a full accounting of her trust.
On cross-motions for summary judgment the District Court rendered a memorandum opinion in favor of the Attorney General. Before the entry of judgment, the German beneficiaries filed a motion to intervene. Over the objection of the Attorney General, the motion was granted. An answer on behalf of the German beneficiary was filed and the matter was then submitted on stipulated facts.
Thereafter the District Court rendered a second memorandum opinion, reaffirming its position that the Attorney General was entitled to the property in the hands of the trustee. Following a hearing on the trustee's accounting, the Court entered Findings of Fact and Conclusions of Law and a Judgment in accordance with its opinion.
The trustee filed notice of appeal and thereafter the Attorney General appealed from that part of the judgment which failed to surcharge the trustee. The intervenors did not appeal. The parties will hereafter be referred to as plaintiff and defendant, as they were denominated in the trial court.
As noted above the matter was submitted to the District Court on stipulated facts, which are as follows:
By trust agreement executed March 30, 1946, Fred Nagel, an American citizen and a citizen of the state of Idaho, transferred a number of securities in trust to Frieda Herrmann and Hazel Ouse, both American citizens. The settlor named fourteen persons, his nephews and nieces, as the beneficiaries of the trust and allocated to each a percentage share of the trust property. These beneficiaries were admittedly German nationals at the time of the execution of the trust instrument. The trustees were directed to make annual payments of the income of the trust to the fourteen named beneficiaries with discretion, however, in the trustees to withhold payment. The direction in the trust reads as follows:
The trustees were directed to pay the trust res, in designated proportions, over to the designated beneficiaries in the event any of them came to the United States. The trustees were also given the discretion to pay over to the designated beneficiaries their stated shares, in their discretion, if they should find that the gift, when paid, would not be subject to confiscation by any government nor create sinews of war for any government antagonistic to the United States.
If not sooner terminated, the trust was to terminate upon the death of the last of the named beneficiaries and the trust property was to be distributed as follows:
The trust thus created was a spend-thrift trust and provided that the interests thus created were non-assignable and could not be reached by creditors.
As all of the beneficiaries were nationals and residents of Germany, the Attorney General, on May 12, 1949, executed Vesting Order 13246 by which he vested in himself for the benefit of the United States all "the right, title, interest and claim of any kind or character whatsoever" of all the beneficiaries in and to the trust. On May 26, 1949, certified copies of the vesting order were served on Frieda Herrmann, who was then the sole remaining trustee, and on her attorneys. At the same time and on several subsequent occasions, demands were made upon the trustee to deliver over to the Attorney General the interests of the beneficiaries but the trustee refused to do so.
The trustee disbursed various sums to the beneficiaries before and after the issuance of the Vesting Order. Prior to the issuance of the vesting order, the trustee distributed trust income in the amount of $9,223.44 for the account of the German beneficiaries by sending cash remittances to them and making purchases on their behalf. Following the issuance of the vesting order the trustee continued to use trust income for the same purposes and expended a total of $6,088.85.
The District Court held "that plaintiff (Attorney General) is the owner and entitled to immediate possession of all the remaining assets of the trust * * *", but refused to surcharge her for any of the disbursements made by her.
The trustee appeals from the judgment of the District Court ordering her to turn over the trust funds to the Attorney General. The Attorney General appeals from so much of the judgment as failed to surcharge the trustee for payments made to the beneficiaries after the date of the vesting order.
The issues, then, are two. First, were the interests of the beneficiaries such that they came within the act and hence subject to confiscation, and secondly, if they were, was the proper surcharge made?
The trustee argues that confiscation in this case would be contrary to the best interests of the United States and would not be consistent with the purpose of the Trading with the Enemy Act. The trustee points out that the trust was created in March of 1946, one year after the cessation of hostilities with the German government and to confiscate the property involved would not succeed in reducing the war potential of an enemy nation, and she argues that as a matter of government policy a liberal approach to the matter should be adopted.
It may seem unjust, at this late date, to carry out to the letter of the law the full application of the Trading with the Enemy Act. We are bound, however, to apply the law as it stands, and the question of policy as argued by the trustee, is an argument best addressed to the Congress, and not the courts.
It is next argued that the interest here seized is a contingent remainder and, as such, is not subject to seizure under Sec. 5(b) of the Act, 50 U.S.C.A.Appendix, § 5(b). The trustee relies upon the cases of Brownell v. Edmunds, 4 Cir., 209 F.2d 349; McGrath v. Ward, D.C., 91 F.Supp. 636, and Harvard Trust Co. v. Attorney General, 329 Mass. 79, 106 N.E.2d 269, and others.
The cases cited in support of the trustee's position hold that, for one reason or another, the enemy alien never acquired any right, title or interest whatever in the subject matter, and consequently there was...
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Schmidt's Will, In re, 37515
...to frustrate the purposes of the Trading with the Enemy Act. There was no such design in the case at bar. The case of Herrmann v. Rogers, 9 Cir., 256 F.2d 871, involves a trust subject to the property laws of the State of Idaho. Again, there are in that state statutory provisions absent fro......
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Paszotta's Trust, In re
...1959, 358 U.S. 332, 79 S.Ct. 353, 3 L.Ed.2d 345, and vacated the judgment of the Court of Appeals of the 9th Circuit (Hermann v. Rogers, 1958, 9 Cir., 256 F.2d 871), and 'Petition for writ of certiorari is granted. The judgment of the Court of Appeals is vacated, and the cause is remanded t......
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Schieb v. United States
...itself is broad and comprehensive, and that it has been liberally interpreted by the courts in favor of the vesting power. Herrmann v. Rogers, 9 Cir., 256 F.2d 871, collates the At the time of the vesting in 1943, the plaintiff, as we have seen, was the one who, under the terms of the will,......
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Hermann v. Brownell
...and our guide. 1. Statement of the Case. A full and detailed statement of the case is to be found in our opinion in Herrmann v. Rogers, 9 Cir., 1958, 256 F.2d 871, 872-874, and need not be repeated 2. The Remand from the Supreme Court. On January 26, 1959, in Herrmann v. Rogers, 358 U.S. 33......